Indian Processing & Garments Services ... vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'C', NEW DELHI Before Sh. N. K. Saini, AM And Sh. I. C. Sudhir, JM ITA No. 2409/Del/2013 : Asstt. Year : 2008-09 Income Tax Officer, Vs M/s Indian Processing & Garments Ward-11(4), Services Ltd., E-12, Hauz Khas, New Delhi New Delhi-110016 (APPELLANT) (RESPONDENT) PAN No. AAACI3157M Assessee by : Sh. Avneesh Matta, CA Revenue by : Sh. T. Vasanthan, Sr. DR

Date of Hearing : 26.03.2015 Date of Pronouncement : 26.03.2015

ORDER Per N. K. Saini, AM:

This is an appeal by the department against the order dated 11.02.2013 of CIT(A)-XV, New Delhi.

2. The only grievance of the department in this appeal relates to the deletion of penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Facts of the case in brief are that the assessee filed return of income on 23.09.2008 declaring Nil income. However, the assessment was framed by the AO u/s 144 of the Act at an income of Rs. 89,18,550/- by estimating the business income at Rs. 7,81,132/- and making an addition on account of cash credit u/s 68 of the Act amounting to Rs. 81,37,414. The AO also initiated the 2 ITA No. 2409/Del/2013 Indian Processing & Garments Services Ltd.

penalty proceedings u/s 271(1)(c) of the Act and levied the penalty of Rs. 46,25,508/-.

3. Being aggrieved the assessee carried the matter to the ld. CIT(A) who deleted the penalty by observing that the assessment order on the basis of which penalty was levied was held to be non-est due to inability of the AO to serve the notices u/s 143(2) of the Act at the correct address.

4. Being aggrieved the department is in appeal. The ld. Counsel for the assessee at the very outset stated that the order of the ld. CIT(A) considering the assessment order as non-est had been confirmed by the ITAT vide order dated 06.06.2014 in ITA No. 2150/Del/2013 in the appeal on quantum preferred by the department. The aforesaid contention of the ld. Counsel for the assessee was not controverted by the ld. DR but he supported the order of the AO.

5. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is an admitted fact that the assessment order on the basis of which the impugned penalty u/s 271(1)(c) of the Act was levied by the AO has been set aside by the ld. CIT(A) and the said order was upheld by the ITAT while deciding the appeal of the department in ITA No. 2150/Del/2013 for the 3 ITA No. 2409/Del/2013 Indian Processing & Garments Services Ltd.

assessment year 2008-09 vide order dated 06.06.2014. Therefore the very basis to levy the penalty is not inexistence, thus, the penalty levied by the AO was rightly deleted by the ld. CIT(A). For aforesaid view, we are fortified by the decision of the Hon'ble Supreme Court in the case of K. C. Builders & Others Vs ACIT (2004) 265 ITR 562 wherein it has been held as under:

"Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside."

6. We, therefore, do not see any merit in this appeal of the department.

7. In the result, the appeal of the department is dismissed. (Order Pronounced in the Court on 26/03/2015)

Sd/- Sd/-

(I. C. Sudhir) (N. K. Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26/03/2015 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR